Public Bill Committee

[Judith Cummins in the Chair]

Judith Cummins: Order. Before we begin, I remind Members to please send any speaking notes to Hansard at hansardnotes@parliament.uk—they will be very grateful. I also remind Members to please switch all devices to silent, and that tea and coffee are not permissible in this sitting.

Clause 28 - Prominence on television selection services

Stephanie Peacock: I beg to move amendment 21, in clause 28, page 37, line 4, at end insert—
“(5) A statutory
instrument containing regulations under subsection (1) may not be made
unless a draft of the instrument has been laid before and approved by a
resolution of each House of
Parliament.”
This amendment would make the Secretary of State’s power to designate regulated television selection services subject to approval by both Houses of Parliament.

Judith Cummins: With this it will be convenient to discuss the following:
Amendment 29, in clause 28, page 40, line 2, at end insert—
“(2A)
When preparing guidance under subsection (1), OFCOM must have regard to
the strategy and policy published by the BBC pursuant to clause 62 of
the Agreement between Her Majesty’s Secretary of State for
Culture, Media and Sport and the British Broadcasting Corporation,
dated 7 November 2016, as that clause may be amended or updated at any
time.”
This amendment requires OFCOM explicitly to consider the relevant parts of the BBC’s regulatory framework when setting its guidance for the new prominence regime under subsection (1) of 362AL.
Clause stand part.
Schedule 3.

Stephanie Peacock: I am pleased to be starting part 2 of the Bill today. Indeed, an update to the prominence regime is arguably the most anticipated of all the Bill’s measures, and I am certainly keen to see it come into force.
As I have spoken about many times already, our public service broadcasters are the cornerstone of our broadcasting sector in the UK, investing billions in original productions and creating content that is trusted, valuable and entertaining for UK audiences. Historically, in return for the high standard of programming and investment that public service broadcasters provide, their channels have been made easy to find on linear television sets—to the benefit of audiences across the  country. However, amid rapid changes in how viewers access television and content more generally, the prominence regime, which has not been updated for decades, is at increasing risk of becoming diluted and outdated.
As ITV identified in its submission to the Culture, Media and Sport Committee, the major risks are twofold. First, public service broadcasters are in danger of being cut out of view, as global content players and platforms strike international deals with online platforms for prominence. Secondly, as a result, our public service broadcasters are at risk of being forced to concede increasingly material percentages of their revenue to these platforms, simply to appear on them. In this situation, it seems like almost everyone loses out—from audiences, to the wider UK production economy, to even the platforms themselves, which may find themselves in a position where they cannot promote the content that UK viewers most want to see. A new prominence framework for the digital era, therefore, was always going to be crucial.
The next question to answer was how prescriptive such a new regime would be in legislation. I am pleased that, in response to this, the Government have avoided explicitly spelling out what prominence looks like in the Bill, or making primary legislation restrictive or resistant to future changes in technology and behaviour. Instead, we have before us a principles-based approach based on finding mutually beneficial carriage deals between what is branded “designated internet programme services” and “regulated television selection services”, with Ofcom being able to provide a framework in which these negotiations can operate.
That is then backed up by a strong dispute resolution and enforcement powers for Ofcom, including the ability to improve significant penalties in the result of non-compliance. This allows for maximum flexibility in both legislation and negotiations, as well as proper protections where agreements cannot be reached. It also allows for the regime to be expanded where necessary to capture new technology that people might be watching television content on. Platforms and PSBs have a history of successful negotiations, creating mutually beneficial deals and partnerships that would be counterintuitive for the prominence regime to undermine.
With that in mind, I am glad that the Department has made a few changes to the initial drafting of the Bill, in particular regarding the agreement objectives that are designed to incentivise the agreement of appropriate terms between platforms and PSBs. The original phrasing had concerned both parties. For PSBs, there were fears that the stated focus on costs would see platforms making unfavourable demands on advertising and data. For the platforms, there was concern that the phrasing could imply a responsibility on their behalf to cover the cost of PSBs. The new phrasing, which looks at the provision of public service content to audiences in the round, will hopefully alleviate some of these worries.
It is also welcome that there has been a clarification over legacy devices. It is important that technical feasibility is taken into account when deciding which devices are designated as being in scope of the regime. I would, however, like to ask for some clarity on the requirement to secure “appropriate” prominence. This was a major topic of discussion during the pre-legislative scrutiny process, with the majority of PSBs calling for this to be upgraded to “significant” prominence. The arguments around this were mostly based on the differences between linear and digital streaming landscapes.
On a traditional television set, appropriate prominence has, in practice, meant a fixed and high slot on programme guides—a relatively straightforward goal to achieve. However, the BBC said in its evidence that it has still sometimes struggled to secure high listings for its children’s channels on linear televisions. Likewise, S4C noted that it remained channel 166 on Virgin Media in Wales until 2021 due to a wide interpretation of the word “appropriate”. On streaming sticks and smart TVs, however, there is an ambiguity as to what appropriate prominence should provide in practice, especially given the many ways one programme might be reached within only one such device. Therefore, for the regime to have its intended impact, the argument is that significant prominence will be needed to ensure that public service content is easy to find on every necessary interface. That was also recommended by the Culture, Media and Sport Committee. However, I am aware that Sky and others have expressed that there may be some unintended consequences to upgrading to significant prominence, particularly because of the risk of overriding consumer choice and preference.
Will the Minister provide a full response to the argument for significant prominence and outline the reasons why the prominence requirement has not been upgraded? Further, what conversations have been had with Ofcom on how the detail of the regime will be set out in the code of practice to ensure that it meets its aims? As I will go on to say throughout the Bill’s passage, we need a strongly empowered Ofcom if this Bill is to be a success.
On a similar note, Will the Minister tell me whether the Department has considered the possibility of including remote controls and multi-use devices in the prominence regime? I know that is something the BBC has consistently called for. Its latest thinking is that electronic programme guides could be given a prominent button on remotes, rather than one PSB in particular. Although my priority remains to see this clause passed, we must explore these questions to make sure that we are fully seizing this once-in-a-generation opportunity to ensure that public service content is easily findable in a digital age.
I will also take this opportunity to briefly discuss the role of regional prominence. Before I continue, I want to reassure colleagues that I do not mean to imply through the use of the phrase “regional prominence” that Wales and Scotland are regions, rather than nations in their own right. I use that terminology because that is how the Bill refers to prominence arrangements that will be required for the likes of S4C and STV, as well as other, genuinely regional services provided by our PSBs. For those broadcasters and their respective audiences in Scotland and Wales, proper prominence will be absolutely crucial. That is perhaps even more so the case when we consider that S4C simply cannot match the promotion budgets of those that dominate streaming platforms, yet it provides a unique service in the Welsh language that others simply do not.
However, some platforms have raised concerns over the technical feasibility of ensuring regional prominence. For example, techUK has said that technical and privacy challenges mean that providing regional variation in prominence would be a disproportionate burden. As a result, S4C has raised concerns that user selection might be used in lieu of guaranteed prominence. That would be quite different to the envisaged package of benefits that the prominence regime would provide for PSBs.
First, will the Minister first reaffirm that the Bill does not require regional prominence for S4C, STV and other regional programming that our PSBs provide? Secondly, will he update us on what discussions his Department has had with both Ofcom and platforms on how this requirement on regional prominence will be enforced and adhered to on a practical level? I know that the detail of what is required will become clear when Ofcom’s code is published after the Bill, but some baseline reassurances are needed now to clarify whether changes are needed to primary legislation to secure the kind of prominence we had all envisaged for the likes of S4C. The Bill must empower Ofcom as much as it can. Regional prominence goes to the very heart of why these changes are being made in the first place, and it is vital that its inclusion in the Bill is in no way compromised or diluted.
Finally, I will address my two technical amendments to this clause. First, I suggested an amendment that changes the power of the Secretary of State to designate or specify a description of regulated television selection services from the negative procedure to the affirmative. As the CMS Committee report recognises, although the Secretary of State can only designate services deemed to be used by a significant number of viewers, and must receive a report from Ofcom, the Minister can still make a decision that goes against Ofcom’s recommendations. Given that, it seems sensible that their decision should be open to greater parliamentary scrutiny.
Too many Bills coming through this Parliament have given sweeping powers to the Secretary of State, as the Minister and I discussed at length during the Data Protection and Digital Information Bill. Though such measures are sometimes needed to futureproof a regime, it is absolutely crucial to ensure that parliamentary scrutiny is not seen as an onerous task to be bypassed, but an important part of shaping good policies. With that in mind, I would like to see the affirmative procedure used in this case.
Secondly, the BBC has raised concern that the new framework creates a level playing field for licensed public service broadcasters in a way that it does not for the BBC. Indeed, the BBC is required under its framework agreement to publish a distribution policy, outlining the conditions under which it makes its services available. The conditions include securing appropriate prominence, quality and value for money. The BBC is also legally required to offer services to third parties without charge and on a fair, reasonable and non-discriminatory basis.
The Media Bill largely recognises that the BBC has a distinct regulatory framework—no less so than in this very clause, where it is made clear that there will be no additional “must offer” obligations on the BBC given its equivalent obligations. However, though there is explicit reference to the BBC’s “must offer” duties in the Bill, there is no matching reference to the BBC’s charter and framework agreement in the “must carry” section of the Bill. Both a “must carry” and a “must offer” requirement are needed to create the conditions for PSBs and platforms to have successful negotiations on prominence from a level playing field. The exclusion of comprehensive “must carry” requirements on platforms when it comes to the BBC may therefore make such negotiations harder. That is particularly worrying given the BBC says it already faces increasing difficulty when negotiating with some platforms that have little interest  in supporting UK PSBs. It says global platforms, in particular, are more focused on self-preferencing their own content, monetising user interfaces and controlling data and algorithms.
My amendment would seek to rectify that inequality in the Bill. It would give the BBC an equivalent negotiating position to the commercial broadcasters, setting out that any regulated platform must also act consistently with the charter and framework agreement. That is hopefully a largely technical change to ensure no unintended consequences that could put the BBC at a disadvantage. My absolute priority on prominence is to ensure that the new measures are brought into force, but it is also important that we take the opportunity to ensure the new regime is as robust and effective as possible while we still have the chance.

John Whittingdale: This section of the Bill on prominence is a central part of the changes the Government wish to make. Although the hon. Lady has done a good job setting out the reasons we decided it necessary to update the prominence requirements, I hope she will forgive me if I recap them since I think it is important that the Government’s position is set out in some detail.
As the hon. Lady described, the objective of the UK system of public service broadcasting is to ensure that public service content is readily available to as wide an audience as possible and is easy to find. PSB prominence plays a crucial role in delivering that. In doing so, it boosts viewership and engagement, which are important to sustain advertising revenue and brand value for PSBs. In turn, that ensures they can continue to deliver the high-quality original programming that UK viewers expect. PSBs receive the benefit of prominence in recognition of the additional obligations placed on them, such as news and current affairs provision, and that has become known as the PSB compact.
However, the existing regulatory framework for ensuring carriage and prominence of PSB channels, set out in the Communications Act 2003, does not extend to the PSBs’ on-demand services, nor services other than electronic programme guides that enable viewers to navigate and select TV programmes. Audiences increasingly watch TV online and, in many cases, bypass traditional distribution platforms altogether, so without the new prominence frame- work, we risk undermining the long-term sustainability of the PSB system in the UK. All PSBs have been calling for an update for some time.
Clause 28 introduces a new online prominence framework for PSB apps, referred to in the Bill as “designated internet programme services”, wherever they appear on particular user interfaces, referred to as “regulated television selection services”. The framework is principles-based to ensure that regulation is proportionate and adaptable for the future without negatively impacting consumer choice and experiences. This approach to regulation aligns with the consistent feedback we have had from stakeholders on both sides through our engagement with them on this issue.
I will turn to the component parts of the framework. First, proposed new sections 362AA to 362AD to the Communications Act 2003 introduce what the Bill refers  to as “internet programme services”. As the name suggests, the principle purpose of an IPS is to provide programming by means of the internet. We expect that PSB apps such as ITVX and BBC iPlayer will be included as they provide access to a mix of on-demand and live-stream programming. The designation process, which will be led by Ofcom, has been designed to ensure both sides of the PSB compact are maintained under the new regime.
In particular, in order to be considered eligible for designation by Ofcom, an IPS must meet three tests. First, it must be provided by a PSB or a person associated with a PSB—that is, another organisation in the same corporate structure. Secondly, it must meet specific eligibility criteria, which includes making a significant contribution to the relevant PSB’s remit and ensuring that the public service remit content included in the service is readily discoverable and promoted. Thirdly, Ofcom must deem it appropriate to designate the IPS according to various factors including the PSB’s statement of programme policy and the extent to which the IPS satisfies specific needs and interests of UK audiences. In a scenario where a designated IPS is no longer making a significant contribution to the remit, or if the IPS is no longer making public service remit content prominent, Ofcom will have the necessary enforcement tools to remedy that, including an ability to revoke the designation altogether.
Following designation, proposed new sections 362AD and 362AN place specific duties on the provider of a designated IPS to ensure that a programme service that receives online prominence continues to meet the criteria for designation. Where a designated IPS is provided by an associate of the PSB, that person must notify Ofcom if they ever cease to be associated with that PSB.
Proposed new sections 362AE to 362AG to the 2003 Act introduce the concept of “television selection services”, which refer to TV platforms that enable viewers to select and access IPSs and the programmes contained within. These are to be limited to services used in conjunction with apparatus that have been specified by the Secretary of State in regulations as “internet television equipment”. While the definition of internet television equipment will be left to secondary legislation, in practice, we expect it to include user interfaces on smart TVs, set-top boxes and streaming sticks. We do not think it should apply to the operating systems on such things as smartphones, laptops and computers, given that they are used for a wide range of different and other purposes. Importantly, only the television selection services that have been designated as in scope of the prominence framework via regulations are caught by part 2. This subset of services is referred to in the Bill as “regulated television selection services”.
Before making the regulations, the Secretary of State must have received a report from Ofcom setting out its assessment of the television selection services or categories of service to designate or, conversely, de-designate. It is not our policy aim to capture all devices and platforms capable of carrying TV content—only those used by a significant number of UK users to access TV online. The Secretary of State will have the power to designate specific television selection services and categories of television selection service.
In the case of designating a specific television selection service, it will need to be used by a significant number of viewers in the UK. In the case of designating a category  of television selection services, clause 28 sets out a number of factors that can be used to frame regulations, including the number of users of the service, how the service is used, the date on which it is first made available and how the service functions, which could include the user interfaces of major TV platforms such as smart TVs.
Importantly, the Secretary of State cannot make any designations until they have received advice from Ofcom, which the Government expect the regulator will consult on. This will ensure that these regulations are appropriate and will provide the necessary evidence required to inform any designations or indeed any de-designations made by the Secretary of State. There will still be ample opportunity for stakeholders to inform Ofcom’s approach to the advice it gives. If the Secretary of State should materially depart from Ofcom’s recommendations, the Bill requires the Secretary of State to set out in a statement their reason for doing so.
Amendment 21, which was tabled by the hon. Member for Barnsley East, would require the regulations to be made under the draft affirmative procedure, rather than the negative procedure. As she and I have discussed several times, we absolutely accept and recognise the importance of proper parliamentary scrutiny. However, we do not agree that the affirmative procedure would be appropriate for these particular regulations.
As the Government set out in our response to the Culture, Media and Sport Committee’s report on the pre-legislative scrutiny of the Bill, this power does not amend primary legislation. All it does is specify which television selection services will be captured by the new prominence framework. We have proposed the negative procedure for these regulations because we think that the Bill already contains sufficient detail to indicate the types of television selection services that could fall within the scope of the regulations.
In summary, the designation process has been designed to ensure that regulation is targeted and proportionate, and that the framework can respond to new technologies and shifts in viewing habits.

Damian Collins: A lot of the existing regime, and also a lot of what is in the Bill, is based on the assumption that as many people as possible will seek to be designated as a public service broadcaster and will do everything they can to keep that designation. Is there not a danger now that if prominence is not effective enough, PSBs will simply decline to be PSBs, with all the obligations that being a PSB places on them, and just seek to make programmes that are popular and that will therefore be recommended and promoted on smart devices? Is my right hon. Friend confident that Ofcom will have the ability to issue guidance that distributors of programmes may need to increase the prominence of public broadcasting if they are not doing so already?

John Whittingdale: My hon. Friend makes an interesting point, and I have sympathy with the concern he expresses. However, if this Bill was not passed, the advantages of being a public service broadcaster would be very small. All the PSBs have made it clear that they regard prominence as an essential benefit of the compact, in order that they are easily found and accessible. Because they have laid such stress on that, we assume that it is still their wish to remain designated as PSBs.
It is, of course, up to any PSB to walk away from the compact if they chose to do so. In doing so, they would no longer necessarily be able to benefit from prominence and the other advantages that come with PSB designation. However, I know that both my hon. Friend and I believe that there is a continuing need for public service broadcasting in this country. One of the purposes of the Bill is exactly to address the point he makes, by ensuring that PSB designation is still an attractive proposition for broadcasters to seek.
Let me return to one or two details of precisely how the system will operate. Once the necessary internet programme services and regulated television selection service providers have been designated, new sections 362AJ to 362AN introduce new rules to ensure the availability of public service content. That is achieved by requiring providers to offer their designated IPSs to RTSS providers and requiring RTSS providers to carry these designated services. After all, prominence would be redundant if the PSB services are not on the platform to begin with.
These availability requirements will be underpinned by statutory agreement objectives that providers of designated IPSs and RTSSs must act consistently with when reaching an agreement on the availability and prominence of designated services and when keeping that agreement in force. These include that the arrangements support the sustainability of public service broadcasting and do not disproportionately restrict how the platform may innovate its service. The intention behind these agreement objectives is for Parliament to provide expectations for the outcome of negotiations between designated IPS providers and RTSS providers. These objectives are to be supplemented by more detailed Ofcom guidance on how providers may act consistently with them.
In that respect, let me address the point made by the hon. Member for Barnsley East in her amendment 29. Proposed new section 362AL requires Ofcom to
“prepare…guidance about how providers of designated internet programme services and providers of regulated television selection services may act consistently with the agreement objectives”
when negotiating on the carriage and prominence of designated services and after an agreement has been reached. The Government absolutely recognise that Ofcom’s guidance should take into account the BBC’s equivalent duties under the framework agreement, as also reflected in its relevant strategies and policies under the agreement, including clause 62. However, I can tell the hon. Lady that proposed new section 362AL(2) already provides for such considerations by Ofcom by referring to
“any duty of the BBC under the BBC Charter and Agreement that is comparable to the duty of providers of designated internet programme services other than the BBC”.
This may be a good opportunity to expand on another point. By convention, the BBC is not regulated in statute. It is the Government’s intention for the new prominence framework to apply to the BBC through the framework agreement. We plan to work at pace with the BBC to make corresponding changes to the its framework agreement to ensure that the relevant parts of the prominence regime apply to the BBC, while also acknowledging how it legally functions. It is the Government’s view that there is already provision in the Bill for Ofcom to consider the BBC’s comparable duties and corresponding policies under its framework agreement in its guidance  on the agreement objectives. It is for that reason that I am unable to accept the amendment of the hon. Member for Barnsley East.
Overall, we think the principles-based approach that we are taking, with Ofcom playing a vital role, is the correct one. It will give Ofcom the tools it needs to ensure that the regime is functioning effectively without being too inflexible or overly prescriptive. Once designated services are available on the platform in question, new sections 362A0 to 362AR introduce specific duties on providers of RTSSs, including the requirement to carry and display designated IPSs with an appropriate degree of prominence. That includes the requirement to carry and give regional prominence to designated S4C services in Wales and STV services in relevant parts of Scotland.

Stephanie Peacock: I asked the Minister to reaffirm that it does not require regional prominence. Obviously, I am very keen to hear that it does because I know that there are some concerns, particularly from S4C, that it might do so in theory but not in practice.

John Whittingdale: I am happy to address that point. The hon. Lady also raised the subject, which was debated on Second Reading and in the Select Committee, of whether the requirement for “appropriate prominence” is a better description than “significant prominence”. That is something we looked at carefully, particularly as it was one of the Select Committee’s recommendations, but we feel that it is important that the approach to regulation should be proportionate and allow for flexibility and operability across different RTSSs. We believe that an appropriate level of prominence, as determined by Ofcom in the code of practice, provides that flexibility and enables Ofcom to implement the regime in a practical way.

Damian Collins: Does the Minister agree that, given the nature of new smart devices, which favour personalisation of content and recommendations to users, smaller regional broadcasters, such as S4C, may benefit significantly, because viewers who have a habit of watching programming in the Welsh language are far more likely to be recommended that programming in the future?

John Whittingdale: My hon. Friend is right. As he says, the technology in this area is evolving very rapidly, so it is important that the regulatory framework is sufficiently flexible to keep up to date with technology as it arises. His point is that we are moving towards viewers having greater and greater control not only of what they watch, but of what comes up as recommendations for them to watch, and can choose which channels appear, and that will continue to evolve. It is therefore important that Ofcom can take account of technology developments in the framework.

Andy Carter: The Minister and the shadow spokesperson have been talking about regional content in respect of national content for Wales, Scotland and Northern Ireland. It is incredibly important that viewers in the regions are able to access regional news and information. Does the Minister agree that it is incumbent upon service providers such as ITV and the  BBC to ensure that, when people access their services, it is very easy to find that regional content? Geolocation is particularly helpful, because it will recognise the user’s postcode, but there needs to be a requirement for public service broadcasters to ensure that it is easy to be set up, so that people can access their local area. That would certainly benefit the service providers, who we all know always talk to us about the strength of their services, such as the number of viewers who watch Granada and other services in the regions. Does the Minister agree that it really comes down to ensuring that the public service broadcasters have those things set up properly and prominently in their apps?

John Whittingdale: I very much agree with my hon. Friend. As I said—and as the hon. Lady the Member for Barnsley East mentioned in her remarks—the issue of regional prominence is important. It is our view that we should replicate the current regional prominence arrangements under the linear regime in the online space, given that the nations and regions are a core component of PSBs. We designed the regime to give Ofcom the discretion to determine various ways of delivering appropriate prominence across different platforms, and that includes delivering regionally.
We expect that Ofcom will set out different options, depending on what would be proportionate and reasonable for RTSSs to deliver, having regard to technical considerations. One method, which my hon. Friend the Member for Warrington South suggested, would be to ask the viewer to submit a postcode at the time that their smart TV or other device is first set up. That would be sufficient to enable regional prominence. Stakeholders will have the opportunity to submit their views on how regional prominence should be delivered in due course, when Ofcom consults on the code.

Kevin Foster: Does the Minister agree that part of this is about viewer or listener choice? For example, my phone would currently geolocate me in London, but I might be far more interested in listening to—and I do, actually—BBC Radio Devon or watching the evening news back in Devon and Cornwall, than I might be in the content based purely on the location. That is the point. The types of choices now available to viewers would have been unimaginable in the era before IT, when we were merely relying on broadcast signals.

John Whittingdale: As I said earlier, the Bill does not, at the moment, suggest that prominence should be required on mobile phones, because they are not primarily used for watching TV, but the point that my hon. Friend makes is absolutely correct. More and more applications and devices are going to be influenced by the location from which they are being used. It will therefore become more important that TVs and all other devices are clearly geolocated in order to allow appropriate prominence of regional programming.
Proposed new sections 362AT to 362AY give Ofcom a dispute resolution function, should negotiations between providers of designated IPSs and RTSSs fail. Our overall intention is to allow PSBs and platforms to pursue mutually beneficial commercial arrangements in the first instance, but if that is not possible, it is appropriate for the regulator to have the necessary powers to intervene in support of effective negotiations.
In addition, proposed new sections 362AZ to 362AZ11 provide Ofcom with the necessary powers to enforce the new prominence framework, which include information-gathering powers and the power to issue notices requiring the provider to take remedial steps and/or pay a financial penalty in the event of a breach. Many of the providers we are talking about are large, sometimes global, organisations, and it is important that Ofcom feels confident that it can take robust enforcement action when required.
Schedule 3 contains further changes to the Communications Act 2003, which are required as a consequence of the new provisions inserted by clause 28. Taken together, we believe that the provisions in the clause will deliver, for the first time, a new, much-needed and bespoke prominence regime to ensure the availability and discovery of PSB content online to the benefit of audiences and PSBs alike. I hope hon. Members will support the clause, and I ask the hon. Member for Barnsley East to consider withdrawing her amendment.

Kirsty Blackman: I agree with the Minister that the clause creates a new and bespoke prominence regime. I have some questions that I was going to ask in interventions, but I figured that I had too many.
I am happy to support the amendments tabled by the shadow Minister relating to the BBC and affirmative approval by the House, but I have some questions arising from the comments that have been made. The comment about personalisation is key. I hope that people who regularly watch S4C, for example, will be offered it. I am slightly concerned that that will conflict with the commercial nature of these devices, and that we will end up in a situation whereby Amazon provides more money to give prominence to a certain television show, which bumps S4C down the list. I am glad that there is flexibility in the Bill to allow things to be updated and changes to be made, because it is important that such conflicts are resolved.

Damian Collins: What may resolve that conflict is the fact that personalisation is often linked to the placement of advertising, so the platform operator may only care about advertising reaching eyeballs and may be agnostic about whether it is placed against S4C content or anyone else’s.

Kirsty Blackman: That is possibly the case. I have never been a platform managing its budget on the basis of advertising, so I do not know exactly how the advertising regime works. As time goes on and the way that people interact with these services changes, that may be updated anyway, provided that there is the flexibility to make changes if we find that people are not being served the content that we expect, and are not receiving that level of prominence of the services. It would be great if the new regime works and people are algorithmically served the content that they like and want to see, but I am concerned that it might not always work out like that. It would therefore be incredibly helpful if the Minister can keep that under review.
On the comments about the words “significant” and “appropriate”, I completely understand the BBC’s concerns. I know that not everybody feels quite so strongly about those words. Some people believe that Ofcom will be clear that “appropriate” means “fairly significant” and “quite prominent”, so that people are able to access  these broadcasters. Again, the Government need to keep that under review to ensure that there is an appropriate level of prominence, and that Ofcom has the ability and strength to say, “This is not appropriate. We need it to be more prominent than it currently is.” Ofcom must have the teeth to enforce that. It should first work with the platforms to ensure prominence—we do not want to move straight to enforcement—so that people can access the public service broadcasters that they expect.
The comments made about television remote controls were also key, and we might come back to them later in relation to radio selection. Hardware is an issue as well as software. For example, a television remote control may allow people to press a Netflix button but not a BBC button, despite the fact that significant proportions of people would prefer to press a button to access the BBC, STV or whatever service they are keen to get, and that they generally go to for information. I have spoken already about the importance of accessibility. Public service broadcasters need to be accessible, and we must work with people to make PSBs as accessible as possible, and prominent; those are two separate but related things.
Local content and local news content are very important. Yesterday, I had a discussion with the BBC, which now provides Aberdeen and Aberdeenshire local bulletins on some of its on-demand services, after a long-running campaign by the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) and me. We have both been constantly pestering the BBC to ensure that our local news bulletins are accessible, particularly so that we can see what is being reported in our local area when we are down here. The BBC has now done that, but I would like commensurate prominence for online and on-demand television services, as well as services on my phone or computer.
On a related note, the Minister talked about the measures applying only to devices that have the main purpose of allowing people to watch television, and I can understand why he has gone down that route. I do not know whether he is aware of Ofcom’s “Media nations” report, which shows that 21% of TV users in Scotland watch through a games console. That is not an insignificant proportion. Some family members may use the games console to game, but others may use it only to watch television. If games consoles are outside the regulatory regime and are not required to give any prominence to public service broadcasters, a chunk of the population is not being properly served and does not have proper access to public service broadcasters.
I appreciate the Minister’s comment about Ofcom being able to update and make changes to the regulated services and providers. However, I am slightly concerned that he has gone too far down the route of saying that the measures apply to devices that are mainly used for television purposes. I am concerned that that will not provide my constituents with the best service, particularly when the percentage of people in Scotland who use games consoles to watch television is double that in England. The proportion is much higher, so this issue will be important. For example, if someone can watch television on a PlayStation, why would they waste money on a Fire Stick? They can already watch television through the games console. If that is the main route by which a not insignificant portion of people watch television, it is important that the Minister considers whether regulating games consoles would improve our constituents’ lives. I genuinely think it would. My concern is mostly  that the Minister should not rule it out; I do not necessarily want him to say that he will definitely regulate things such as games consoles.
My other question, which the Minister may not be able to answer today, is about the prominence requirements for smart TV provision. If I say to my Fire TV Cube, “Alexa, play BBC News on BBC iPlayer,” I would expect it to do that. Provisions we come to later relate to asking a smart speaker to play something on a certain provider. That is about not just prominence on screen, but prominence when I use my voice to make a request of my Fire Cube. I hope and expect that Ofcom and the Government intend that I will get BBC News on BBC iPlayer, if that is what I ask my smart TV for. This is about not just navigating the system, but being able to make a request by voice.
In my experience, younger people are certainly keen to use smart controls. As the generations change, we will see a lot more people requesting television programmes by voice, rather than navigating through menus. If we are to future-proof the legislation, it is important that voice commands give a relevant level of prominence or accessibility to public service broadcasters, as does pressing buttons to navigate the software—that is another way that people use services.
It would be good if I could have a brief response from the Minister, saying that he will not rule out regulating gaming consoles in future, so that Ofcom and everybody else understands that the legislation could move in that direction if he and the Government believe that a significant enough number of individuals view television mainly or wholly through gaming consoles.

Hywel Williams: I will not repeat the points made by Members on both sides of the Committee, with which I agree. Briefly, I welcome the provision under proposed new section 362AA(7)(a) to the Communications Act 2003 that
“OFCOM must have regard…to the contribution that the internet programme service will make towards fulfilling the public service remit”
of PSBs, and S4C in particular. As I said on Tuesday, and as I am sure that I will say again when we come to discuss clause 32, S4C is a national, not regional, broadcaster in Wales. It is a separate, independent broadcasting service, much like BBC1 and ITV1. Broadcasting in Wales through S4C is not niche; it offers a wide range of broadcasting, from sport and drama to stand-up and gardening. In fact, through its range of programmes, it can and does extend people’s knowledge and surprise them. One of the things that has always surprised me about BBC news provided through S4C is the range of international reports in Welsh from all parts of the world., sometimes from professional journalists, but also from Welsh people who happen to be wherever the incident or news item is. That extends people’s horizons. S4C is not niche, and not parochial in any sense, so its content must be readily discoverable and prominent on television services, wherever they are.
It is difficult to find out how many Welsh speakers there are outside Wales. The census does not ask that, but it is reckoned that there are at least 100,000 Welsh  speakers in England. A rather more interesting proxy for the figure is the fact that quite recently, Welsh was the most popular language to learn on Duolingo. In 2023, some 3 million people had registered, one way or another, to learn Welsh on Duolingo—that is probably more people learning Welsh outside Wales than there are people living in Wales. The extent of it may be learning to say “bore da”—good morning—but that is still interesting. I seek reassurance that “appropriate degree of prominence” in proposed new section 362AO will not lead to S4C being limited to specific audiences, for the reasons I have set out.

John Whittingdale: I am most grateful to hon. Members for raising a number of interesting questions. The general answer to them is that these matters need to be considered by Ofcom when it draws up the details. However, I can seek to address one or two of the points made. On the continuing discussion about “appropriate” versus “significant”, I will try not to repeat our maxim that “significant” may be appropriate, but “appropriate” does not necessarily always mean significant—hopefully I got that right. For instance, there is the issue around S4C. Obviously, if someone lives in Wales, then S4C prominence is appropriate. If someone lives in Chelmsford and is learning Welsh, then perhaps it might become appropriate, as the hon. Member for Arfon set out.
My hon. Friend the Member for Torbay made a point about algorithms, and basing prominence on behaviour as well as geolocation. If someone regularly turns to, and finds, S4C, it is an indication that they are interested in Welsh language television. That might well be taken into account in the prominence regime, but that is a matter for Ofcom. The technology may not yet have reached that point, but I entirely take my hon. Friend’s point that geolocation does not necessarily deliver sufficient prominence for each individual viewer.
On the question that the hon. Member for Aberdeen North asked about PSB buttons on remote controls, she is right that one or two of the streaming services pay to have their own button. My remote control has a Netflix button. I think it would be quite difficult to have a PSB button, because PSB obviously covers quite a wide range of broadcasters. It would not be right to say, “You’ve got to have a BBC button”; in a sense, the whole of the point of the legislation is to ensure that we do not need to do that. The prominence regime is designed not to force people to watch PSBs, but just to make them easily findable, so that when someone turns on their television, the first thing they see is the range of PSB channels as suggestions. If that is delivered, we do not necessarily need a button. Netflix presumably paid to have a button because it does not automatically pop up when someone turns on their television, but it will only be pressed by those who choose to watch Netflix. I do not think a button is necessary.
The hon. Lady also raised the interesting question of television-like devices. My children had an Xbox, and because it was constantly plugged in, we used it to access TV, rather than having to remove all the wires. She is absolutely right that in some families, the games console may well be frequently used to access television. That too is something that Ofcom will need to take into account. She asks that I make it clear that it is not ruled out, and I am happy to do that. We have asked Ofcome to look into those issues and draw up what is appropriate. It came as something of a surprise to me to read in my  guidance notes that people can watch television on their refrigerator in some cases. I am not necessarily suggesting that it would be appropriate to give the BBC prominence on a refrigerator. All those things are matters that Ofcom will need to consider.

Damian Collins: Does my right hon. Friend agree that a distinction needs to be drawn between internet-connected devices—through which BBC iPlayer or the ITV hub or whatever it is can be accessed—and a smart television, which displays multiple different TV providers in the same place? On the latter, the user is not necessarily going to a separate place on the internet to watch something; they are going to one place, where these things are held together. It is in that environment that we want to ensure that the public broadcasters have due prominence.

John Whittingdale: My hon. Friend is absolutely right. More and more devices have screens, but they are not necessarily primarily or even occasionally used for watching television, so it would be completely wrong to include them within scope. However, there will be a variety of possible devices for watching TV, and Ofcom will need to look at that.

Kirsty Blackman: On the PlayStation, the user can click on all the games, but they also have a TV button they can click on, which takes them to a screen like that on a smart television, showing each of the different apps. This is similar to what the hon. Member for Folkestone and Hythe was saying: there will be a view of all the different apps, and then the user can choose from them. They are not all set out separately, in amongst the games. I feel it would be easy to regulate this, if the Minister and the Government felt that it was important to do so, particularly given the number of people for whom consoles are their main source of television use.

John Whittingdale: The hon. Lady makes an absolutely fair point. I hope Ofcom will look into that as it draws up the rules. Finally, on the point about voice activation, she is right that I can talk to my television set without even needing to pick up a remote control. Again, it is an obligation of Ofcom’s to consider appropriate prominence in that respect, and I am sure that it will take that into account.

Stephanie Peacock: I hope the BBC is reassured by the Minister’s explanation. I am happy not to press amendment 29 to a Division. This has been a useful debate, involving Members on both sides of the room, and it was particularly good to note the points about TV remote controls and gaming, which affect so many of the population.
On amendment 21, I continue to disagree with the Minister on the use of the affirmative procedure. For that reason, I would like to vote on it.

Question put, That the amendment be made.

The Committee divided: Ayes 7, Noes 10.

Question accordingly negatived.

Clause 28 ordered to stand part of the Bill.

Schedule 3 agreed to.

Clause 29 - Sustainability duty of C4C

Question proposed, That the clause stand part of the Bill.

Judith Cummins: With this it will be convenient to debate clauses 30 and 31.

John Whittingdale: This chapter of the Bill relates to Channel 4 and is perhaps a little less contentious than it originally might have been.
Channel 4 is a vital part of the UK’s world-renowned system of public service broadcasting. For over 40 years it has commissioned innovative and distinctive content that reflects and shapes our culture, but like all our PSBs, Channel 4 faces structural changes in the broadcasting landscape. Changing consumption habits are making audiences more fragmented and harder to reach than ever before; at the same time, competition for viewers, programmes and talent is increasing at a rapid pace. The Government want Channel 4 not only to survive these changes but to seize the opportunities that they present. That is why in January this year the Government set out a package of reforms to support Channel 4’s long- term sustainability while remaining in public ownership.
Clause 29 takes forward the first element of the sustainability package: a new duty on the Channel 4 board to consider the corporation’s long-term sustainability as part of its decision making alongside delivery of the Channel 4 remit. The existing obligations on the corporation and its board are focused on the Channel 4 service—its continued provision and the fulfilment of its public service remit—and on the discharge of its duties in relation to media content. There is currently no formal requirement in legislation for the corporation to consider its financial sustainability and long-term success, although this kind of consideration may already be occurring informally.
The wording used in the clause is similar to the directors’ duty in section 172 of the Companies Act 2006, which places a duty on company directors, among other things, to promote the success of the company, and in doing so to have regard, among other matters, to the likely consequences of any decision in the longer term. The wording for the duty builds on that of the 2006 Act by using language that is appropriate for Channel 4; in particular, it reflects the fact that Channel 4 is a statutory corporation with board members but no shareholders, as opposed to a Companies Act limited company.
In line with the recommendations made by the CMS Committee during pre-legislative scrutiny, we have worked closely with Channel 4 to ensure that the duty is compatible with the corporation’s existing statutory obligations. This is particularly evident in the way we translate the concept of “success”, which is not defined in the 2006 Act. In Channel 4’s case, we have translated this to mean at least maintaining
“the amount of activity that is done in pursuance of their primary functions,”
while remaining
“securely in a position to meet costs incurred”.
The corporation’s primary functions are
“securing the continued provision of Channel 4…the fulfilment of the public service remit”
and
“the performance of C4C's duties”.
Our definition therefore has, at its heart, Channel 4’s public service ethos.
When the Government announced their plans to remove Channel 4’s publisher broadcaster restriction, we were clear that we would work closely with the production sector to consider how best to ensure that Channel 4’s important role in driving investment into the sector was safeguarded. During our engagement with the sector, perhaps the most frequent suggestion was that the Government should put in place measures to ensure fair and open access to Channel 4’s commissions. In the event that Channel 4 chose to start a production business, these measures should ensure that Channel 4 treats all producers, whether internal or external, fairly and equitably. In response to the concerns, clause 30 therefore places Channel 4 under a duty to put in place and adhere to procedures to facilitate fair competition for its commissions for broadcast and on-demand services, which should include, among other things, procedures for referring disputes between producers and Channel 4 to mediation.
The duty is drafted to sit parallel to, and therefore to benefit from, the monitoring and compliance structure of Channel 4’s existing media content duties. This means that, alongside its statement on media content policy, Channel 4 must also prepare and publish a statement of commissioning policy, setting out its proposals for securing procedures that facilitate fair competition, and to report on its performance in carrying out these proposals. Ofcom will be required to review Channel 4’s performance of its duties in relation to commissioning media content alongside its review of Channel 4’s media content duties, and to prepare a report on its findings. As with Channel 4’s statement on media content duties, Ofcom will have the power to enforce Channel 4’s commissioning duties by way of directions in the first instance, and ultimately financial penalties.
The new commissioning duties in this clause will help to ensure that the high levels of competition and plurality that characterise our production sector and that have made it so successful will be maintained following any changes. The Channel 4 sustainability package that the Government announced earlier this year included a commitment to remove Channel 4’s publisher broadcaster restriction, which will enable Channel 4 to make its own content, should it choose to do so, opening up new options for the corporation to diversify its revenues  away from linear television advertising, the market for which is both highly cyclical and in long-term structural decline.
Clause 31 takes forward that commitment by repealing section 295 of the Communications Act 2003, which restricted Channel 4’s involvement in programme making. At the same time, the Government want to ensure that any changes to Channel 4’s operating model do not have a negative effect on the UK’s highly dynamic and successful production sector, particularly those parts of it that are supported by the fulfilment of the public service remit.
Clause 31 also requires Ofcom to consider whether and to what extent the making of programmes by Channel 4 or a body corporate controlled by C4C has affected the fulfilment of the public service remit, as part of one of its reviews under the Communications Act. This consideration, and any conclusions that Ofcom has arrived at, must form part of its report for that review period. The report that includes Ofcom’s findings will be the one that covers the period at least three years after Channel 4 engages in programme making, to ensure that there is sufficient time for any potential impact on the public service remit to materialise prior to Ofcom’s review. It will be triggered only if C4C or a body corporate controlled by C4C engages in the making of programmes with a view to their being broadcast on the Channel 4 service.
The new review forms part of a broader package of measures to support the independent production sector, which also includes the new duty on Channel 4 to ensure that it commissions fairly and an increase in Channel 4’s independent production quota. The Government believe that the package delivers the best of both worlds. It gives more flexibility for Channel 4 to grow, resulting in larger and more consistent commissioning budgets and more money flowing back into the independent production sector. I hope the Committee favours clauses 29 to 31 standing part of the Bill.

Stephanie Peacock: I will begin by discussing clause 31, which I think requires a bit more attention, before briefly addressing clauses 29 and 30. In perhaps the most significant of the changes made to Channel 4 throughout the Bill, clause 31 ends the restriction on Channel 4 that means it cannot be involved in the making of any programmes that it broadcasts.
Before I speak in a little more detail about the clause, I want to take the opportunity to set some context. I welcome the fact that an even more significant measure has not made its way into the Bill, as the Minister alluded to. The Government’s initial plans to privatise Channel 4 would have been disastrous. Channel 4 has a truly unique role in British broadcasting. As a company owned by the British public, which costs the public nothing, it commissions new programming, creates jobs, and discovers new talent across the country.
The channel plays a key role in the pipeline of talent and skills in the industry. For example, 4Skills has provided opportunities to young people who might never have considered a career in broadcasting, through apprenticeships, training schemes and the Content Creatives scheme. 4Skills has reached over 10,000 people since 2015 and aims to reach a further 100,000 over the next decade. Channel 4 has also brought us Film4, which spends more on British film than any other UK broadcaster.  It invests millions in feature films that nurture new talent and help to sustain writers, directors and production companies across the UK. In addition, Channel 4 takes seriously the need to enable opportunities outside London, spending over 50% of its commissioning budget outside London—something it has committed to continue even after the introduction of the clause.
The Government’s plan to sell off Channel 4 was a plan to sell out Britain, heavily disrupt the broadcasting industry, and puncture several local economies. I am very pleased that Ministers finally came to their senses, although I question why it took them so long, and I reiterate the disappointment that I expressed on Second Reading that the process has delayed the introduction of other important measures in the Bill.
The clause is best understood in the context of the U-turn on privatisation. Channel 4 never asked for the removal of the publisher broadcaster restriction. Instead, the measure was announced as part of the package that the Government put forward when announcing Channel 4 would not be for sale. The statement that the then Secretary of State, the right hon. Member for Chippenham (Michelle Donelan), put out at the time said that the change would give the channel more “commercial flexibilities”, and
“exploit Intellectual Property…as other public service broadcasters are able to.”
What the announcement did not include was a detailed assessment of what impact the change might have on the independent production sector more widely. Even Channel 4 warned that there could be
“unintended consequences on the UK production sector”
as a result of the new powers. Directors UK also pointed out that the changes could
“distort or negatively impact the market in which our members are employed”.
Furthermore, the Media Reform Coalition expressed concern that even the current state of play was seeing smaller independent companies suffer, with Channel 4 becoming overly reliant on super indies. It was therefore crucial that the wider market was properly considered before the change was implemented.
I am pleased that the Department and Channel 4 have made a range of commitments to mitigate any potential negative impacts of the change. 4Skills will receive increased annual investment, the number of roles outside London will be doubled and, perhaps most important, Channel 4’s independent quota will rise to 35% of qualifying programmes. If Channel 4 does commence production, which I understand would be a gradual process and is some way off at the moment, further measures would be put in place. There would be a separate C4C production business with its own board and governance, a proper dispute resolution procedure and new reporting requirements. All of that will then be underpinned by a new requirement for Ofcom to consider whether Channel 4’s in-house productions have impacted on the fulfilment of its remit.
Nevertheless, I do not believe that package of measures has eased everyone’s concerns. I know the Media Reform Coalition, for example, has called for the restriction to remain in place and for further measures, such as a small and medium-sized enterprises guarantee, to ensure that a majority of commissioning spend goes to producers with an annual turnover of less than £25 million. Although  I believe that significant progress has been made since the first draft was published to assess the impact of the clause on the market, I continue to understand and recognise that the changes will be worrisome to independent producers, particularly small ones.
If Channel 4 decides to exercise the new powers in the Bill, I hope it continues the approach it has taken thus far of doing everything possible to allow the independent sector to thrive, from top to bottom, and keeping itself accountable by setting targets that ensure this. With that in mind, I am happy to proceed with the measures within and without the Bill in the hope that they will be the start of a longer process of assessment and engagement with the wider market. I am grateful that Channel 4 will remain in public ownership, and hopeful that it will continue to deliver a unique contribution to the industry, as well as our screens, for years to come.
I know there was some concern over the initial drafting of clause 29, not because anyone disagrees with the principle of the duty, but because of a fear of unintended consequences if the clause did not take into account the primary functions of Channel 4 in looking to mirror the Companies Act 2006. Indeed, the new duty outlined in this Bill should largely only reinforce what Channel 4 is already doing. As such, it is right that the wording has been adjusted so that it directly references the primary functions of the channel, and is based on the well understood directors’ duties in the Companies Act 2006 while recognising the channel’s status as a statutory corporation rather than a limited company. Having spoken with Channel 4 since the new version of the Bill was published, I understand it is much happier with this drafting.
Clause 30 places C4C under a duty to facilitate fair competition for its commissions for broadcast and on- demand services; both Ofcom and Channel 4 are then given duties to report on C4C’s performance in adhering to that policy. As mentioned when we discussed the terms of trade regime in part 1, it is incredibly important to ensure that basic principles of fair competition are applied when public service broadcasters are commissioning work, so I am pleased that this clause will further enshrine good practice in legislation.

John Whittingdale: Perhaps I should start by saying the one thing we agree on is that Channel 4 has played a valuable role in the UK broadcasting ecology, and that we want that to continue. I do not always agree with everything I see on Channel 4—I suspect few in this room do—but it has a history of innovative programming that is of real benefit. As the hon. Member for Barnsley East says, it has been hugely important in supporting the independent production sector and creating jobs across the UK. I should say that “Married at First Sight” is made, in part, in my constituency of Maldon. I think that Channel 4 has just announced there is going to be a dedicated channel to “Married at First Sight”, although how much of a contribution to the public service broadcasting remit that will make is perhaps debateable. Nevertheless, Channel 4 has a wide range of diverse content.
The Government considered whether there should be a change of ownership because we want to make sure Channel 4 is in a strong position to thrive going forward. There is no doubt that the Channel 4 model is under pressure. It becomes particularly vulnerable when faced  with an advertising downturn, as indeed we are seeing at the moment. To provide Channel 4 with greater support through diversification of its revenue streams, the Government have decided it is appropriate to remove the restriction to allow Channel 4 to make its own programmes.

Clive Efford: When Channel 4 representatives gave evidence to the CMS Committee recently, they were asked about that producer-provider split and whether they would make use of it. Their answers were quite dismissive in tone. They suggested the change would require them to take responsibility not only for production, but for the marketing of any product, which they do not have to do now; that is part of the role of independent producers that produce the content. Did Channel 4 at any time in its discussions with the Minister indicate that it wanted this new responsibility?

John Whittingdale: The first thing to say is that nobody is forcing Channel 4 either to acquire a production capacity or to develop its own production capacity. That will be a matter for Channel 4; we are merely giving it the option. I hear the hon. Gentleman’s point about Channel 4 saying that it is not particularly interested in pursuing that option, but I think that has changed. I have had a lot of discussions with Channel 4, including one yesterday to discuss precisely how the requirements would work. The fact that Channel 4 has engaged a lot with us on the detail—particularly the competition aspect of the commissioning process—indicates that, even if not immediately, it certainly wishes to explore the option and have that ability. I do not think that debating how the requirements will operate is a waste of time. I do not know when Channel 4 will take advantage of the option; that is a matter for it to decide, but it is certainly keen to have it available.

Andy Carter: I hear what the hon. Member for Eltham said, but all the other media businesses in PSB have acquired production companies so that they can sell products around the world. If Channel 4 said, “We are not going to do that; we are just going to stay as a broadcaster publisher,” it would be left in an incredibly vulnerable state. I encourage Channel 4 to get on and move into that space, because having alternative revenue streams to advertising will give it more certainty in the future.

John Whittingdale: My hon. Friend is absolutely right. Having an in-house production facility, as, for instance, ITV and the BBC do, allows channels to potentially make programmes not just for their own transmission but for others as well. It therefore offers a diversification of revenue streams.
The other point my hon. Friend might be getting at is that Channel 4 commissions all its programming output externally, but that is usually governed by terms of trade that mean that it does not retain the intellectual property of that programme. The restriction limits the amount of money that it can make from the commissioning of programmes. There are reasons why Channel 4 might well want to explore the option, but, as I say, it is not required to do so. It will be a matter for the channel.
The hon. Member for Barnsley East rightly raised the concern that giving Channel 4 that freedom could adversely impact the independent production sector. That is why we have included in the Bill the requirements for fair competition and for Ofcom to monitor the statement of commissioning policy and carry out a review to ensure that there is not an adverse impact of the kind that she described, as well as the increase in the independent production quota. I think that the Bill contains protections for the independent production sector, but at the same time gives Channel 4 the freedom that there is a strong chance it will wish to exploit at some future date.

Question put and agreed to.

Clause 29 accordingly ordered to stand part of the Bill.

Clauses 30 and 31 ordered to stand part of the Bill.

Clause 32 - S4C’s powers and public service remit

Question proposed, That the clause stand part of the Bill.

Judith Cummins: With this it will be convenient to discuss the following:
Clauses 33 to 36 stand part.
Schedule 4.

John Whittingdale: Clauses 32 to 36 relate to S4C and enact the recommendations made in the “Building an S4C for the future” independent review. The clauses update S4C’s powers, public service remit, and audit and governance arrangements. They also adjust the approval arrangements for S4C’s commercial activities, and update the BBC’s responsibilities to support S4C in delivery of its public service remit.
Clause 32 amends the Communications Act 2003 to update S4C’s powers and public service remit. It removes the current geographical restriction on S4C’s powers, ensuring that it is able to provide services outside Wales, and confirms that it is allowed to provide digital or online services, as recommended by the independent review published in 2018. That will allow S4C to broaden its reach and offer its content on a range of new platforms in the UK and beyond, ensuring that it continues to play a vital role as a public service broadcaster and has a strong future delivering high-quality content for Welsh-speaking audiences in the UK and indeed around the world.
The clause also simplifies the framework of S4C’s functions, public service duties and public service remit currently set out in the Communications Act 2003, reflecting the new public service remit introduced for all public service broadcasters in part 1 of the Bill. In recognition of S4C’s position as the UK’s only dedicated Welsh-language broadcaster, the clause retains the requirement that a substantial proportion of S4C’s public service remit content must be in Welsh. However, to ensure that S4C is not unnecessarily limited in its ability to deliver for Welsh-speaking audiences, the clause confirms that S4C may also provide content that does not fulfil the public service remit alongside the content that does. That brings S4C’s powers into line with those of other public service broadcasters.
The clause also adjusts the approval arrangements for S4C’s commercial activities. It replaces the previous requirement for approval to be provided by way of an order in secondary legislation with the requirement for approval in writing. That will give S4C greater flexibility in responding to market developments, as was recommended by the independent review.
The Secretary of State will have the power to approve a range of activities by way of a general approval, or to approve a particular activity in a specific approval. Any other activities already being carried out by S4C are to be treated as approved at the point of commencement, whether or not they were previously approved by the Government, given that it would be impractical to pause them purely for the purposes of obtaining approval after commencement.
It is important that S4C is given commercial flexibility as recommended by the review. However, at the same time, as it is a PSB in receipt of significant public funding, it is also appropriate for the Secretary of State to be given the opportunity to consider the suitability of specific activities to ensure that they remain in line with S4C’s functions. The clause therefore specifies that S4C must obtain the Secretary of State’s approval in writing before providing any television programme service, or doing anything for a charge or with a view to making a profit.
It would be difficult to create an exhaustive list on the face of the Bill of approved activity for payment, or intended to make a profit, that S4C could undertake, because we cannot predict precisely what future commercial activity might constitute. The clause therefore allows the Secretary of State to determine which activities can be covered by a general approval and which would need specific approval, for example, on the basis of a financial threshold.
Clause 33 formally replaces S4C’s governance arrangements, currently set out in legislation, with a new unitary board that is composed of both executive and non-executive members. That is also in response to a recommendation made by the 2018 review, which recommended that the governance structure at the time, which was the S4C Authority, should be replaced with a new unitary board comprising executive and non-executive directors. That replaces the previous two-tier management structure, which the review concluded created uncertainty around responsibilities.
In response to the review, and with the support of the Government, S4C has already created a shadow unitary board that undertakes governance responsibilities, with provision in its standing orders for specific situations where the differences between the previous model and the unitary-board model have required a bespoke approach. The clause therefore places that arrangement on a statutory footing by establishing S4C’s new unitary board and confirming that the board has overall responsibility for S4C’s activities in pursuit of its powers and duties.
The clause makes further changes to the Broadcasting Act 1990 to create the unitary board, adding the requirement for non-executive and executive members in accordance with the principle of the unitary board, and confirms that, as now, the chair must be appointed by the Secretary of State, along with a specific number of non-executive members.
The rest of the clause is largely limited to updating existing legislation with references to non-executive and executive members.
Clause 34 amends S4C’s financial audit arrangements in schedule 6 to the Broadcasting Act 1990, so that the Comptroller and Auditor General is formally appointed in legislation as S4C’s external auditor, rather than S4C’s being able to choose its own auditor. Again, this is in response to a recommendation made by the review. The review recommended that the Government consider whether the audit arrangements were suitable, and the Government accepted the recommendation. Although the Comptroller and Auditor General has actually taken over the auditing of S4C’s accounts, the clause puts the arrangement on a statutory footing.
The clause also places requirements on S4C subsidiaries. It requires each S4C subsidiary to appoint the Comptroller and Auditor General as auditor unless the Comptroller and Auditor General agrees that the subsidiary may appoint a different auditor. The Comptroller and Auditor General may inspect the accounts of any S4C subsidiary regardless of the identity of the subsidiary’s auditor, and S4C must give the Secretary of State access to the accounts and related documents of an S4C subsidiary.
Clause 35 allows the BBC and S4C to come to an alternative arrangement on ways for the BBC to support S4C in delivery of the public service remit. Current legislation results in a fixed approach of requiring the BBC to provide at least 10 hours of programmes in Welsh to S4C per week. The clause amends the 1990 Act to allow the BBC and S4C to agree in writing an alternative arrangement to the BBC’s existing responsibility if it is mutually and commercially beneficial for both parties. That reflects the fact that the BBC may be able to provide to S4C other types of support that are more relevant to its functions and remit in the modern digital broadcasting age. That could include, for instance, the use of spectrum, specific services, rights, funding or content. This will better enable S4C to broadcast a wide range of high-quality content and serve Welsh-speaking audiences. The BBC will be required to publish the terms of an alternative agreement as soon as reasonably practicable. The BBC will be able to exclude from publication any information that it considers to be commercially sensitive.
The clause also removes references to S4C’s analogue television service and the requirement for Channel 4 to provide S4C with programme schedules and programmes to deliver that service. This simply reflects the fact that S4C’s analogue television service, which showed programmes in English from the Channel 4 service alongside Welsh language programmes when Channel 4 was not available in all parts of Wales, no longer exists.
Finally, clause 36 introduces schedule 4, which contains further amendments to the Broadcasting Act 1990, the Broadcasting Act 1996 and the Communications Act 2003 that are required as a consequence of the provisions in this part. The changes also reflect S4C’s new public service remit.
Taken together, these clauses reflect the Government’s recognition of the valuable contribution that S4C makes to the lives and wellbeing of Welsh speakers and learners. We remain committed to helping S4C to adapt to the changing media landscape and remain relevant as an independent and modern public service broadcaster in the UK. I urge that clauses 32 to 36 and schedule 4 stand part of the Bill.

Stephanie Peacock: The second chapter of part 3 of the Bill makes a number of changes to S4C, which I understand is largely very welcoming of the Bill and  wants to see it passed, particularly in order to benefit from prominence measures and to become in scope of the listed events regime. These clauses are of crucial importance, but are not quite as immediately transformative as the changes made to C4C, as they largely provide a legislative basis for changes that have already started to roll out. Indeed, it was all the way back in 2018 that the “Building an S4C for the future” review made recommendations, which the Government accepted and which form the basis of the clauses.
Given the long wait for the new laws, S4C and DCMS agreed for many of the changes to be adopted early in the meantime. As such, although clause 32 introduces a new remit, S4C has already taken advantage of the changes within it, offering online and digital services and providing services outside Wales. This has allowed S4C to adapt to the changing landscape and broaden its reach and appeal beyond just those Welsh speakers situated in Wales. It is therefore welcome that the clause ensures that legislation reflects the new reality of how S4C can be accessed and delivered.
The clause also makes a key change to the approval arrangements for S4C’s commercial activities. Legislation currently provides that S4C must gain approval for commercial activities by way of an order in secondary legislation. S4C has described that as a cumbersome process, especially for a commercial activity that normally needs to be dealt with fairly quickly. I therefore welcome the move to simplify the process, which will allow for S4C to make the most of the commercial opportunities—for example, by investing in creating Welsh language content in the hopes of selling it internationally, or investing in Welsh companies to help to grow the sector more widely. Nevertheless, will the Minister give a little more detail on how the Secretary of State will make such approval decisions and what protections will be in place throughout the process? There seems not to be much detail on the face of the Bill, and I am conscious of the need to protect against any future Minister who may act in bad faith. Overall, I am of course supportive of the idea of modernising S4C, allowing it to reach as many viewers as possible and ensuring that it can grow sustainably as an organisation.
Similarly to clause 32, clause 33 makes changes in legislation that are already operating in practice. In this instance, the clause replaces S4C’s governance structures to create a new unitary board comprised of both executive and non-executive members. S4C’s board has operated as a shadow unitary board since autumn 2018, so it is good to finally have the change reflected on the statute books, alongside arrangements for membership, tenure, payment and proceedings for the board and its members. Indeed, the old structure of S4C was two-tiered, with a  separate S4C authority and executive strategic management board. For an organisation that wanted to drive progress in Welsh language content, the inconsistency and confusion over duties at the heart of the organisation were getting in the way. The new shadow unitary board and the official unitary board that will be implemented when the Bill receives Royal assent will ensure that S4C has the right structure it needs to act as a modern, forward-facing organisation, and it is right that the changes are made formally.
Clause 34 changes the current financial audit arrangements for S4C so that the Comptroller and Auditor General is formally appointed in legislation as S4C’s external auditor, rather than S4C’s being able to choose its own auditor with confirmation by the Secretary of State. This was another recommendation of the 2018 review of S4C, which concluded that there should be a greater external accountability and scrutiny of whether S4C delivers its objectives in a cost-effective way. The Comptroller and Auditor General is the leader of the National Audit Office and an officer of the House of Commons, with the statutory authority to examine and report on the value for money of public spending. Given that S4C receives funding from the Department to carry out its activities, and that the NAO already oversees the BBC’s charter and the licence fee, it seems appropriate to create consistency across this area by bringing S4C into line with such oversight.
Finally, I will address clause 35, as clause 36 contains only consequential amendments. Currently, the BBC is required to provide S4C with at least 10 hours of television programmes in Welsh per week. The clause amends the requirement so that the BBC and S4C can agree an alternative arrangement should they wish. This new flexibility is matched with an assurance that if no alternative arrangements are made, the BBC’s existing responsibilities continue. This seems consistent with the Government’s approach in the Bill of allowing mutually beneficial arrangements to be the first port of call for partnerships in broadcasting, while ensuring that certain standards are upheld through a backstop.
The clause also removes outdated references to Channel 4 working with S4C’s analogue channel, and makes some technical changes to language, including the removal of references to “the Welsh authority” and replacing them with “S4C” to reflect the new governance structure and the fact that S4C is now the name of the entire organisation, rather than the old analogue channel. Overall, the clause feels reflective of this part of the Bill on the whole, in that it seeks to modernise legislation on S4C to allow it to drive forward and to reflect the material reality that S4C has been operating with and under for a long time.

Ordered, That the debate be now adjourned.—(Mike Wood.)

Adjourned till this day at Two o’clock.